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[SI FINANCIAL GROUP, INC. LETTERHEAD]
EARNINGS RELEASE
(NASDAQ: SIFI)
SI FINANCIAL GROUP, INC. REPORTS RESULTS FOR THE QUARTER ENDED MARCH 31, 2007
Willimantic, Connecticut--April 25, 2007. SI Financial Group, Inc. (the
"Company") (NASDAQ Global Market: SIFI), the holding company of Savings
Institute Bank and Trust Company (the "Bank"), reported net income of $449,000,
or $0.04 basic and diluted earnings per common share, for the quarter ended
March 31, 2007 versus net income of $795,000, or $0.07 basic and diluted
earnings per common share, for the quarter ended March 31, 2006.
Net interest and dividend income decreased 6.8% to $5.3 million for the quarter
ended March 31, 2007 from $5.6 million for the quarter ended March 31, 2006. Net
interest and dividend income decreased for the quarter due to a higher cost of
funds primarily related to interest rates paid on certificate of deposit
accounts and the volume of interest-bearing liabilities, offset by an increase
in the average balance of loans.
The provision for loan losses decreased $120,000 to $165,000 for the first
quarter of 2007. The first quarter of 2006 included an additional provision for
loan losses of $150,000 related to the indirect automobile loan portfolio, which
was purchased in February of 2006, due to the increased risk of loss associated
with this type of consumer lending. At March 31, 2007, nonperforming loans
totaled $4.5 million compared to $90,000 at March 31, 2006. The increase was
primarily attributable to three commercial mortgage loans totaling $3.5 million.
Net loan charge-offs were $62,000 and $2,000 for the three months ended March
31, 2007 and 2006, respectively. Consumer loans related to the indirect
automobile portfolio represented all loan charge-offs for the first quarter of
2007.
Noninterest income was $2.5 million for the quarter ended March 31, 2007
compared to $2.1 million for the quarter ended March 31, 2006. The increase in
noninterest income principally resulted from a gain of $321,000 from the sale of
marketable equity securities during the first quarter of 2007. Additionally,
wealth management fees increased $88,000 primarily resulting from growth in the
market value of assets under administration. The increase in noninterest income
was offset by a decrease in other noninterest income of $43,000 and service fees
of $18,000 for the quarter ended March 31, 2007.
Noninterest expenses were $6.9 million for the quarter ended March 31, 2007
compared to $6.3 million for the quarter ended March 31, 2006. The increase in
noninterest expenses reflected an increase in operating costs associated with
the opening of two branch offices in 2006. Occupancy and equipment, compensation
costs, other noninterest expenses and outside professional services contributed
the largest increases to noninterest expenses. New branch offices resulted in
higher occupancy and equipment expense primarily due to additional operating
lease payments, depreciation expense and other occupancy-related expenses.
Compensation costs were higher in 2007 due to increased staffing levels
associated with the new offices. Other noninterest expenses were lower in 2006
compared to 2007 as a result of a change in estimate for lower than anticipated
losses on uncollectible items related to the implementation of the Bank's remote
branch capture system at the end of 2005. Outside professional services expense
was higher in 2007 due to the termination of the agreement to purchase a
mortgage company, which was announced earlier this month, resulting in a charge
to operations for purchase-related transaction costs associated with the
termination, offset by a reduction in other legal and auditing expenditures.
Total assets grew $2.9 million, or 0.4%, to $759.9 million at March 31, 2007
from $757.0 million at December 31, 2006. Contributing to the increase in assets
were increases of $5.8 million in net loans receivable and $1.9 million in
available for sale securities, offset by decreases of $4.1 million in cash and
cash equivalents, $383,000 in accrued interest receivable and $212,000 in other
assets. The increase in net loans receivable reflects increases in commercial
and residential mortgage loans of $5.3 million and $3.0 million, respectively,
during the first quarter of 2007. Available for sale securities increased as a
result of purchases of predominately mortgage-backed securities with longer-term
maturities. Repayments of Federal Home Loan Bank advances reduced cash and cash
equivalents during the first quarter of 2007. Accrued interest decreased as a
result of commercial loan payments and the reversal of interest on nonperforming
loans. Furthermore, the decrease in other assets primarily resulted from the
write-off of purchase-related transaction costs associated with the termination
of the mortgage company purchase and the settlement of other receivables.
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Total liabilities were $676.7 million at March 31, 2007 compared to $674.7
million at December 31, 2006. Deposits increased $8.9 million, or 1.7%, which
included an increase in predominately NOW and money market and certificate of
deposit accounts of $5.6 million and $2.6 million, respectively, during 2007 as
a result of additional branch offices and attractive promotional rates. The
Bank's new e.SI checking product contributed $6.6 million to the increase in
deposits, which was partly offset by decreases in other deposit products.
Borrowings decreased from $127.4 million at December 31, 2006 to $122.3 million
at March 31, 2007, resulting from the repayment of Federal Home Loan Bank
advances.
Total stockholders' equity increased $822,000 from $82.4 million at December 31,
2006 to $83.2 million at March 31, 2007. The increase in equity related to
earnings of $449,000, a decrease in net unrealized holding losses on available
for sale securities aggregating $267,000 (net of taxes) and the amortization of
equity awards of $192,000, offset by dividends declared of $189,000.
"The mix of asset and liability growth during the first quarter of 2007 creates
a positive trend for improved performance for the Bank," commented President and
CEO, Rheo A. Brouillard.
As previously announced, the Company declared a cash dividend of $0.04 per
outstanding common share on March 21, 2007, which will be paid on April 27, 2007
to shareholders of record as of April 6, 2007. SI Bancorp, MHC, the Company's
mutual holding company parent, waived receipt of its dividend.
SI Financial Group, Inc. is the holding company for Savings Institute Bank and
Trust Company. Established in 1842, the Savings Institute Bank and Trust Company
is a community-oriented financial institution headquartered in Willimantic,
Connecticut. Through its nineteen offices, the Bank offers a full-range of
financial services to individuals, businesses and municipalities within its
market area.
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This release contains "forward-looking statements" that are based on assumptions
and may describe future plans, strategies and expectations of the Company. These
forward-looking statements are generally identified by the use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project" or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors that could have a
material adverse effect on the operations of the Company and its subsidiaries
include, but are not limited to, changes in market interest rates, regional and
national economic conditions, legislative and regulatory changes, monetary and
fiscal policies of the United States government, including policies of the
United States Treasury and the Federal Reserve Board, the quality and
composition of the loan or investment portfolios, demand for loan products,
deposit flows, competition, demand for financial services in the Company's
market area, changes in the real estate market values in the Company's market
area, ability to operate new branch offices profitably, ability to effectively
and efficiently integrate acquisitions and changes in relevant accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating any forward-looking statements and undue reliance should not be
placed on such statements. Except as required by applicable law or regulation,
the Company does not undertake, and specifically disclaims any obligation, to
release publicly the result of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after the date of
the statements or to reflect the occurrence of anticipated or unanticipated
events.
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<Table>
<Caption>
SELECTED FINANCIAL CONDITION DATA:
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(Dollars In Thousands / Unaudited) March 31, December 31,
2007 2006
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ASSETS
Noninterest-bearing cash and due from banks $ 13,176 $ 14,984
Interest-bearing cash and cash equivalents 8,844 11,124
Investment securities 128,026 126,168
Loans held for sale 257 135
Loans receivable, net 579,879 574,111
Cash surrender value of life insurance 8,188 8,116
Other assets 21,564 22,399
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Total assets $759,934 $757,037
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $547,566 $538,676
Borrowings 122,340 127,421
Other liabilities 6,820 8,554
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Total liabilities 676,726 674,651
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Stockholders' equity 83,208 82,386
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Total liabilities and stockholders' equity $759,934 $757,037
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</Table>
<Table>
<Caption>
SELECTED OPERATING DATA:
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(Dollars In Thousands / Unaudited) Three Months Ended
March 31,
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2007 2006
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Interest and dividend income $10,474 $9,530
Interest expense 5,222 3,896
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Net interest and dividend income 5,252 5,634
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Provision for loan losses 165 285
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Net interest and dividend income 5,087 5,349
after provision for loan losses
Noninterest income 2,483 2,124
Noninterest expenses 6,946 6,280
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Income before provision for income taxes 624 1,193
Provision for income taxes 175 398
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Net income $ 449 $ 795
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<Table>
<Caption>
SELECTED OPERATING DATA - CONTINUED
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(Unaudited) Three Months Ended
March 31,
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2007 2006
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Earnings per common share:
Basic $ 0.04 $ 0.07
Diluted $ 0.04 $ 0.07
Weighted-average common shares outstanding:
Basic 11,805,171 11,821,981
Diluted 11,887,491 11,876,492
</Table>
<Table>
<Caption>
SELECTED FINANCIAL RATIOS:
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(Dollars In Thousands / Unaudited) At or For the
Three Months Ended
March 31,
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2007 2006
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Selected Performance Ratios: (1)
Return on average assets 0.24% 0.46%
Return on average equity 2.20 4.02
Interest rate spread 2.48 3.04
Net interest margin 2.98 3.44
Efficiency ratio (2) 93.69 80.95
Asset Quality Ratios:
Allowance for loan losses $ 4,468 $3,954
Allowance for loan losses as a percent
of total loans 0.77% 0.72%
Allowance for loan losses as a percent of
nonperforming loans 98.59 4,393.33
Nonperforming loans $ 4,532 $ 90
Nonperforming loans as a percent of total loans 0.78% 0.02%
Nonperforming assets (3) $ 4,857 $ 90
Nonperforming assets as a percent of total assets 0.64% 0.01%
</Table>
(1) Quarterly ratios have been annualized.
(2) Represents noninterest expenses divided by the sum of net interest and
dividend income and noninterest income, less any realized gains or losses
on the sale of securities.
(3) Nonperforming assets consist of nonperforming loans and real estate owned.
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CONTACT:
Sandra Mitchell
Vice President/Director of Corporate Communications
Email: investorrelations@banksi.com
(860) 456-6509